'cost of living is too high'
Discussion
DonkeyApple said:
davepoth said:
Debt on a depreciating asset really is daft. You can't even sell it on to cover the debt if you get into financial trouble. As has been said above, 0% deals are a bit of a different matter, since you may as well keep the money in an interest earning account for as long as you can.
The problem is that there is no such thing as a zero funding retail deal. The interest is buried somewhere in the price you are paying as are the fees.
Now, once fees and funding are hidden you can sneak additional premiums in there so you are likely to be paying more.
Finance firms are not charities they are masters of structured debt products. And most dealers now are little more than retail shop windows and counters for finance products.
The 0% deals are set up to catch the f
kwits.A few years back we purchased a pc from PC world on a 0% deal the salesman mentioned a hell of a lot of people come to the end of the free period and fail to pay the full price meaning suddenly they are paying 19%+ back dated to the purchase date, a disciplined purchaser gets free finance an idiot gets a deal that is worse than slinging it on their credit card.
Finance is a way to get Cash quickly, there are many reasons why it can be a good answer, lets say you have a fixed term investment that is about to mature but before it does you need a new bed, washing machine, freezer or car, do you buy a cheap stop gap and replace a month later or do you get finance because you know you will have the cash in a month? Or you see a great deal on a dream car but you haven't sold your current car. Unaffordable finance is a problem, especially in the it's only a few quid more out of the budget, my wife and I have fallen foul of that when you add it up your few quid on each item ends up as a hundred plus a month on stuff that will probably need replacing a week after the finance is paid off.
Indeed. But you are talking about thought out and calculated reasons.
Personally, I don't buy the dream car argument as we all know that another one will come along. So for me that falls into the 'selling yourself a story' camp along with 'I can earn more with the cash', 'I'll have the money to pay for it next month or next year' and 'I wanted to keep my money in the bank'.
They are all scams we use to rationalise having something today that we cannot afford today.
Debt is an important and powerful element of modern society.
When it is used to back assets which are intended to deliver a return well in excess of the borrow then it is a prudent tool.
When it is not it is a folly's adventure to the poor house.
I am well aware that most people disagree with me and some aggressively so.
Those who aggressively disagree are simply giving their situation away and most of those who casually disagree will probably suddenly understand one morning many years from now.
Personally, I don't buy the dream car argument as we all know that another one will come along. So for me that falls into the 'selling yourself a story' camp along with 'I can earn more with the cash', 'I'll have the money to pay for it next month or next year' and 'I wanted to keep my money in the bank'.
They are all scams we use to rationalise having something today that we cannot afford today.
Debt is an important and powerful element of modern society.
When it is used to back assets which are intended to deliver a return well in excess of the borrow then it is a prudent tool.
When it is not it is a folly's adventure to the poor house.
I am well aware that most people disagree with me and some aggressively so.
Those who aggressively disagree are simply giving their situation away and most of those who casually disagree will probably suddenly understand one morning many years from now.
DonkeyApple said:
Indeed. But you are talking about thought out and calculated reasons.
Personally, I don't buy the dream car argument as we all know that another one will come along. So for me that falls into the 'selling yourself a story' camp along with 'I can earn more with the cash', 'I'll have the money to pay for it next month or next year' and 'I wanted to keep my money in the bank'.
They are all scams we use to rationalise having something today that we cannot afford today.
Debt is an important and powerful element of modern society.
When it is used to back assets which are intended to deliver a return well in excess of the borrow then it is a prudent tool.
When it is not it is a folly's adventure to the poor house.
I am well aware that most people disagree with me and some aggressively so.
Those who aggressively disagree are simply giving their situation away and most of those who casually disagree will probably suddenly understand one morning many years from now.
Personally, I don't buy the dream car argument as we all know that another one will come along. So for me that falls into the 'selling yourself a story' camp along with 'I can earn more with the cash', 'I'll have the money to pay for it next month or next year' and 'I wanted to keep my money in the bank'.
They are all scams we use to rationalise having something today that we cannot afford today.
Debt is an important and powerful element of modern society.
When it is used to back assets which are intended to deliver a return well in excess of the borrow then it is a prudent tool.
When it is not it is a folly's adventure to the poor house.
I am well aware that most people disagree with me and some aggressively so.
Those who aggressively disagree are simply giving their situation away and most of those who casually disagree will probably suddenly understand one morning many years from now.
DonkeyApple said:
Debt on cars is for suckers and the weak. Simple as.
When you have dealers staying in business because of the finance kick backs it's easy to see that it is a big problem in the UK.
Far too many people buying things they cannot afford and needing to spend buckets in fees, interest and premiums in order to get what they want and desire.
You seem to be spectacularly missing the point of the finance business, whilst answering your own questions on this thread. And being incredibly patronising to boot.When you have dealers staying in business because of the finance kick backs it's easy to see that it is a big problem in the UK.
Far too many people buying things they cannot afford and needing to spend buckets in fees, interest and premiums in order to get what they want and desire.
The whole reason the finance industry exists is to provide money to people so that they can buy things that they cannot afford, or choose not to spend money on.
This includes houses, cars and any consumer goods, including luxury items that they may wish to eventually own.
People make judgements about how much they can afford on a monthly basis, rather than the total cost of the goods - how is that unaffordable? e.g. I can afford $3000 in 3 years time or I can afford $85 a month for the next 3 years.
There doesn't need to be a reason, a justification or any external judgement of anyone who chooses to structure their finances in this manner.
The vast majority of people make all their payments, they get their goods having paid a higher overall price for early acquisition, the finance companies make profits, the economy is stimulated by the consumer spending etc. The net result is positive for all.
Your view would have society rewind the clock 200 years. Are you perhaps religiously opposed to this or a supporter of Hitlers campaign against usury?
donkey apple, would you rather have bought a chrysler crossfire many years ago for £30,000 cash as you want to, or leased it at the £99 plus vat per month fee they wanted? Personally if I had the cash or not leasing is much better.
On a more up to date subject those dodge nitro's were £99 plus vat a year or two ago or you could have bought one for £20k
Even going right up to date, an Audi A5 cab is £249 plus vat per month. Again, whether I had the cash or not I think that the lease deal works out much much better than buying for cash.
Sometimes it does work and it depends on your attitude to risk and so on.
I agree with you in general but you are wrong to say that in all cases someone with finance on a car is stupid.
Here are some examples.
1. Someone who has been given 8 months to life and has no dependants and has always wanted a lamborghini.
2. Someone who wants to borrow on a classic DB5 in mint condition that he has been offered for £80k as the other guy needs the money quickly.
3. Someone who needs to borrow the money as he is due to get his hands on his trust fund when he turns 25 and wants a nice car at say 24.
Trouble is mate, not everything in the world revolves around money as you seem to think it does.
Borrowing to pay £200 per month on a pcp on an audi A1 with £20 road tax, no mot for 3 years, free servicing and 70mpg and a little bit of feel good factor and respect could be seen as better than having the K plate vauxhall astra that costs more to insure, needs money spent come MOT time, you have to pay £200 per year for a service, does 30 mpg and is a rusty old heap and costs more to tax could arguably be seen as good planning as with the Audi you know where you stand and you aren't going to be hit by an unexpected bill whereas in the astra you could be hit with a £500 bill and then be forced to borrow it on a 19.9% credit card.
In general I agree with you but I think you are being too aggressive about it all.
On a more up to date subject those dodge nitro's were £99 plus vat a year or two ago or you could have bought one for £20k
Even going right up to date, an Audi A5 cab is £249 plus vat per month. Again, whether I had the cash or not I think that the lease deal works out much much better than buying for cash.
Sometimes it does work and it depends on your attitude to risk and so on.
I agree with you in general but you are wrong to say that in all cases someone with finance on a car is stupid.
Here are some examples.
1. Someone who has been given 8 months to life and has no dependants and has always wanted a lamborghini.
2. Someone who wants to borrow on a classic DB5 in mint condition that he has been offered for £80k as the other guy needs the money quickly.
3. Someone who needs to borrow the money as he is due to get his hands on his trust fund when he turns 25 and wants a nice car at say 24.
Trouble is mate, not everything in the world revolves around money as you seem to think it does.
Borrowing to pay £200 per month on a pcp on an audi A1 with £20 road tax, no mot for 3 years, free servicing and 70mpg and a little bit of feel good factor and respect could be seen as better than having the K plate vauxhall astra that costs more to insure, needs money spent come MOT time, you have to pay £200 per year for a service, does 30 mpg and is a rusty old heap and costs more to tax could arguably be seen as good planning as with the Audi you know where you stand and you aren't going to be hit by an unexpected bill whereas in the astra you could be hit with a £500 bill and then be forced to borrow it on a 19.9% credit card.
In general I agree with you but I think you are being too aggressive about it all.
jonah35 said:
Even going right up to date, an Audi A5 cab is £249 plus vat per month. Again, whether I had the cash or not I think that the lease deal works out much much better than buying for cash.
Can you provide the link please - we can try and find the elusive lease deal that is better than cash.NoelWatson said:
Can you provide the link please - we can try and find the elusive lease deal that is better than cash.
A difference between leasing and purchasing outright with cash, is who has the depreciation risk.Some might prefer a fixed cost due to a lease arangement rather that the uncertainty of purchasing the car outright and not knowing the total cost of the car until you sell it.
Murph7355 said:
Not sure "aggressive" is the right word. DA's being very black and white about it.
All personal choice. But he's pretty much spot on...
Definitely being pretty black and white as I fell intelligent people know that there are wooly bits around the edges that don't need to be explained to them. All personal choice. But he's pretty much spot on...
What we are really looking at is a general assessment of why the majority use debt to purchase depreciating assets. And that is simply because they cannot control themselves and have to have something they cannot at that moment in time afford to buy.
Most people in the UK will not like to hear this and we are a nation in denial. Time will very sadly prove them to have been foolhardy to dupe themselves this way.
Debt is used very badly in the UK. I thought people would have learnt more in the last few years but it seems the masses are still sleep walking into future problems.
Interestingly this is yet another thread where proponents of paying even more for something they cannot afford in the first instance have been unable to construct a sensible defence based on rational thinking or without becoming overly defensive.
I am completely open to clear defenses of using debt in this way but to date I simply have not read of one that is not a niche reason.
Some of the responses on this subject have displayed a frighteningly weak level of fiscal competence amongst adults and tends to show why the finance industry is so lucrative.
Obviously I am aware that each time this subject crops up I am pissing into the wind.
DonkeyApple said:
Definitely being pretty black and white as I fell intelligent people know that there are wooly bits around the edges that don't need to be explained to them.
What we are really looking at is a general assessment of why the majority use debt to purchase depreciating assets. And that is simply because they cannot control themselves and have to have something they cannot at that moment in time afford to buy.
Most people in the UK will not like to hear this and we are a nation in denial. Time will very sadly prove them to have been foolhardy to dupe themselves this way.
Debt is used very badly in the UK. I thought people would have learnt more in the last few years but it seems the masses are still sleep walking into future problems.
Interestingly this is yet another thread where proponents of paying even more for something they cannot afford in the first instance have been unable to construct a sensible defence based on rational thinking or without becoming overly defensive.
I am completely open to clear defenses of using debt in this way but to date I simply have not read of one that is not a niche reason.
Some of the responses on this subject have displayed a frighteningly weak level of fiscal competence amongst adults and tends to show why the finance industry is so lucrative.
Obviously I am aware that each time this subject crops up I am pissing into the wind.
What we are really looking at is a general assessment of why the majority use debt to purchase depreciating assets. And that is simply because they cannot control themselves and have to have something they cannot at that moment in time afford to buy.
Most people in the UK will not like to hear this and we are a nation in denial. Time will very sadly prove them to have been foolhardy to dupe themselves this way.
Debt is used very badly in the UK. I thought people would have learnt more in the last few years but it seems the masses are still sleep walking into future problems.
Interestingly this is yet another thread where proponents of paying even more for something they cannot afford in the first instance have been unable to construct a sensible defence based on rational thinking or without becoming overly defensive.
I am completely open to clear defenses of using debt in this way but to date I simply have not read of one that is not a niche reason.
Some of the responses on this subject have displayed a frighteningly weak level of fiscal competence amongst adults and tends to show why the finance industry is so lucrative.
Obviously I am aware that each time this subject crops up I am pissing into the wind.
buying a car on finance, stupid.
I'm not sure financing a car, particularly a used one, is stupid. You can make some stupid decisions with it, but you you can make stupid decisions when you cross the road.
If the payments are easily affordable, then the interest is the cost of enjoying it now. What price is happiness? There is more to life than making your pound stretch it's furthest, as long as the risk is managed and it doesn't affect anyone else in a negative manner.
If the payments are easily affordable, then the interest is the cost of enjoying it now. What price is happiness? There is more to life than making your pound stretch it's furthest, as long as the risk is managed and it doesn't affect anyone else in a negative manner.
DonkeyApple said:
Murph7355 said:
Not sure "aggressive" is the right word. DA's being very black and white about it.
All personal choice. But he's pretty much spot on...
Definitely being pretty black and white as I fell intelligent people know that there are wooly bits around the edges that don't need to be explained to them. All personal choice. But he's pretty much spot on...
What we are really looking at is a general assessment of why the majority use debt to purchase depreciating assets. And that is simply because they cannot control themselves and have to have something they cannot at that moment in time afford to buy.
Most people in the UK will not like to hear this and we are a nation in denial. Time will very sadly prove them to have been foolhardy to dupe themselves this way.
Debt is used very badly in the UK. I thought people would have learnt more in the last few years but it seems the masses are still sleep walking into future problems.
Interestingly this is yet another thread where proponents of paying even more for something they cannot afford in the first instance have been unable to construct a sensible defence based on rational thinking or without becoming overly defensive.
I am completely open to clear defenses of using debt in this way but to date I simply have not read of one that is not a niche reason.
Some of the responses on this subject have displayed a frighteningly weak level of fiscal competence amongst adults and tends to show why the finance industry is so lucrative.
Obviously I am aware that each time this subject crops up I am pissing into the wind.
NoelWatson said:
Until the Gunment "learn" the populace a lesson by raising rates and eliminating moral hazard, this behaviour will continue.
That's an interesting point. Is the finance on cars variable or fixed on the whole?And how would a balloon payment work if it couldn't be rolled over because the new rate was unaffordable?
DonkeyApple said:
NoelWatson said:
Until the Gunment "learn" the populace a lesson by raising rates and eliminating moral hazard, this behaviour will continue.
That's an interesting point. Is the finance on cars variable or fixed on the whole?And how would a balloon payment work if it couldn't be rolled over because the new rate was unaffordable?
I must be really stoopid. I have three cars on finance.
But then, I didnt have the cash in the bank to by the first one. In fact, if I had the cash in the bank I would have bought another flat. The car is paid for from monthly revenue, capital sums are saved for investment.
The second was a really foolish decision. SWMBO had a car that was past it's best. I foolishly bought a little Beetle and the monthly payment was less than the difference in fuel between her current car and the new car + fuel! Also bought at trade price from a main dealer with low interest rate and great warranties but more importantly she wanted a Beetle.
The third was sheer stupidity. After working out my annual mileage, costs associated with it and the likely future deppreciation of my car I realised that it was the optimum time to swap out. I got back 96% of my cost on a car I had owned for two years, bought from tthe same dealer at a trade price with 28month warranty and went from 17mpg to 35mpg. This difference being more than enough to cover the additional monthly payment.
Finance isnt a bad option. It isnt for foolish people. It is all about using it sensibly.
Simond S said:
I must be really stoopid. I have three cars on finance.
But then, I didnt have the cash in the bank to by the first one. In fact, if I had the cash in the bank I would have bought another flat. The car is paid for from monthly revenue, capital sums are saved for investment.
The second was a really foolish decision. SWMBO had a car that was past it's best. I foolishly bought a little Beetle and the monthly payment was less than the difference in fuel between her current car and the new car + fuel! Also bought at trade price from a main dealer with low interest rate and great warranties but more importantly she wanted a Beetle.
The third was sheer stupidity. After working out my annual mileage, costs associated with it and the likely future deppreciation of my car I realised that it was the optimum time to swap out. I got back 96% of my cost on a car I had owned for two years, bought from tthe same dealer at a trade price with 28month warranty and went from 17mpg to 35mpg. This difference being more than enough to cover the additional monthly payment.
Finance isn't a bad option. It isn't for foolish people. It is all about using it sensibly.
ah yes, the 'only a brand new car on finance can be the right car for me with high enough mpg' crowd But then, I didnt have the cash in the bank to by the first one. In fact, if I had the cash in the bank I would have bought another flat. The car is paid for from monthly revenue, capital sums are saved for investment.
The second was a really foolish decision. SWMBO had a car that was past it's best. I foolishly bought a little Beetle and the monthly payment was less than the difference in fuel between her current car and the new car + fuel! Also bought at trade price from a main dealer with low interest rate and great warranties but more importantly she wanted a Beetle.
The third was sheer stupidity. After working out my annual mileage, costs associated with it and the likely future deppreciation of my car I realised that it was the optimum time to swap out. I got back 96% of my cost on a car I had owned for two years, bought from tthe same dealer at a trade price with 28month warranty and went from 17mpg to 35mpg. This difference being more than enough to cover the additional monthly payment.
Finance isn't a bad option. It isn't for foolish people. It is all about using it sensibly.
honestly though i've never heard of another car producing any where near 35mpg that wasn't brand new... oh wait. that's ridiculous.
future depreciation as n excuse after buying a new car as well. hahaha, was a good one.
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